Athabasca, CNPC Expect to Close Canadian Oil Sands Deal

Chester Dawson, Ben Dummett and Brian Spegele were first to report that Athabasca Oil and representatives of PetroChina in private conversations told Athabasca shareholders that both sides expected to close the Dover oil sands deal soon under current terms.

The story as it appeared on Dow Jones:
July 30, 2014 2:22 PM EDT – Athabasca, CNPC Expect to Close Canadian Oil Sands Deal

By Chester Dawson, Ben Dummett and Brian Spegele

CALGARY– Athabasca Oil Corp. and China National Petroleum Corp., one of China’s largest state-run energy companies, said Wednesday they expect to close a $1.23 billion deal for a Canadian oil sands operation which was unveiled in April.

Mao Zefeng, who works on investor relations for PetroChina Co., CNPC’s listed subsidiary, confirmed that he met with investors in New York in recent weeks, and responded to their questions over the deal for the oil sands project in northern Alberta. “I said that as far as I know there is not any sign that PetroChina will not proceed with this project,” said Mr. Mao.

A representative for Athabasca said the company is working with CNPC executives in Canada toward completing a deal, but declined to provide a timeline. “We fully believe the transaction will close in a timely manner,” said spokesman Matthew Taylor.

The Calgary-based company exercised an option in April to sell its 40% stake in an oil sands project to a unit of China National Petroleum Corp. for C$1.32 billion. More than three months later it has yet to receive the funds, sparking concern about the deal and sending its stock price down to seven months lows in trading on the Toronto Stock Exchange.

Athabasca released a statement early Monday stating it is working with the CNPC subsidiary, Calgary-based Phoenix Energy Holdings Ltd., to conclude the transaction and would “update the market on material developments.”

The company’s stock price fell 7.2% to $5.95 on Tuesday. On Wednesday, its shares traded up 2.0% at $6.07, but are still down nearly 12% since Friday.

The slump comes amid a shake-up in the leadership at Canadian affiliates of CNPC, which has raised questions from some investors about the Chinese company’s commitment to the deal. Representatives for CNPC in Canada didn’t return calls for comment.

The executive who served as head of CNPC’s Canadian operations, Margaret Jia, left her role earlier this month. People close to the company and familiar with Ms. Jia’s family say she is the sister-in-law of Zhou Yongkang, a retired senior Communist Party official who once ran CNPC. Mr. Zhou was formally named Tuesday by Chinese authorities as a suspect in a disciplinary probe, which state media said was linked to an anticorruption drive championed by President Xi Jinping.

Another CNPC executive in Canada, Li Zhiming, departed in recent weeks as head of Brion Energy Corp., the operating company for CNPC’s oil sands operations.

Neither Mr. Li nor Ms. Jia has been accused of any wrongdoing. Mr. Li was met by corruption investigators upon arrival at Beijing’s airport, according to a person familiar with the matter. He couldn’t be reached for comment. Ms. Jia didn’t return calls seeking comment.

The expected payment to Athabasca would give Brion 100% of the Dover oil sands project, the last part of a deal worked out in 2010 that initially gave the Chinese 60% of the planned 250,000 barrel a day operation. In early 2012, Phoenix bought out the remaining 40% stake in the nearby MacKay River oil-sands project from Athabasca, giving it full ownership.

It had taken majority control of MacKay River, along with the nearby Dover project, in 2010.

Alistair MacDonald contributed to this article

Write to Chester Dawson at chester.dawson@wsj.com, Ben Dummett at
ben.dummett@wsj.com and Brian Spegele at brian.spegele@wsj.com

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